Selling your business could be one of the most important and difficult decisions you will make in your business career. When things are going well – your business is making money, you’re enjoying yourself, and the future looks great - you’re not thinking about preparing for your retirement.
The earlier you start planning for your company’s sale, the better you’ll be able to take advantage of a higher valuation and a quick turnaround. Here are some good reasons why you should be prepared to sell:
· You may fall sick unexpectedly
· Your life goals change along the way
· Not having a successor to replace you as you retire
· Business partnership issues and you want to sell your shares
· Lifestyle change
When you are ready to sell your successful company, you should keep these three things in mind:
· You must make a profit from your investment in the company
· The sale of your equity should be converted into liquid assets such as cash
· The amount you receive should meet your needs for your professional and personal life
What is the value of your business?
Determining the value of your business is like sales – what are your potential buyers willing to pay for a business like yours? With the help of a Chartered Accountant, you can run various accounting models to come up with a number using data that comes from the economic strength of your business, your industry, how much your competitors are worth, your sales revenue and profit margins. All these must be taken into account. Remember, the buyer is not looking at purchasing the cheapest business they can find, they are looking for a company that can potentially make them more money in the future. So you need to prove to the buyers that your business will continue to grow in the industry you’re in.
Work with a third-party business valuator whose objectivity can help smooth the sale for both yourself and your buyer.
Are your finances in shape?
You should already have your books kept in order while you’re running your business. When it comes to a sale, nothing is more important to a buyer than your accounting. They will be asking questions such as:
· Are you making money?
· Are your profit margins healthy?
· Does the company have any unmanageable debt?
New owners want to buy businesses that are healthy and thriving. You'll also want to be sure that you've reduced your liabilities as much as possible, doing things such as settling any lawsuits and making sure all tax payments are up to date.
Gather a professional team
Selling a business is complicated. With a complex transaction like this, you want to make sure that all your bases are covered. By hiring a professional team to guide you in the sales process, they can provide you with the objective advice that you need to sell your business at the best value. In recruiting a team, make sure that you choose consultants who have experience in your industry and your type of business, be it a small business or a large multi-national corporation.
Other than a corporate lawyer who can help you with the legalese and contracts, you should also take a look at hiring a good accountant. If your business has assets such as a manufacturing plant and warehouses, you can also recruit a corporate realtor who may have contacts in your industry.
Make sure that you take the time and effort to do it right the first time. By preparing carefully and using the best resources that you can hire, you are increasing the chances of selling your business at a great price.